Columbia argues that it is not liable for the payout because Cottage did not provide adequate security for its documents, a clause the California hospital network agreed to when it signed the insurance policy.

Among the allegations, Columbia claims that Cottage failed to check for and apply security patches within 30 days of release, replace default access settings on security devices, undergo annual security audits, and outsourced data to firms with poor security. Cottage is also accused of failing to provide adequate detection and tracking of changes to its network and data.